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Where Did All the Entry-Level Jobs Go?

Many Firms Expect New Graduates to Arrive Job-Ready From Day One

In an effort to cut costs, some firms have also cut entry-level jobs, but there are also a new slew of job openings that didn't exist some years ago. WSJ's Lauren Weber reports on the News Hub with Sara Murray. Photo: iStock/nyul.

Companies bruised by the recession have stayed lean by automating and outsourcing core functions while slashing training budgets and payrolls. But in an effort to cut costs, some companies also have cut entry-level jobs that serve as a crucial first step on the path to a professional career. And others have made the responsibilities for first-timers more sophisticated, raising the bar for new graduates, who are expected to arrive job-ready from day one.

These developments may be making it more difficult for some young adults to gain a foothold in the labor market, economists say. The unemployment rate for people 20- to 24-years-old is falling as the economy recovers, but remained at a historically high 11.3% in July. Young adults lacking college degrees are having an especially hard time finding entry-level jobs.

Managers at
State Street Corp.
are grappling with a transformation in the company's entry-level roles.

Some bottom-rung jobs are disappearing. Others are becoming more sophisticated.
Steve Dininno

Four years ago, the Boston-based bank began an overhaul of its technology systems to cut costs and streamline operations. Now, as the project nears its end, the company is assessing how to employ fund accountants when some of their main assignments—such as calculating funds' net asset values—have been automated, said Executive Vice President
Kathy Horgan,
who oversees talent management.

The job titles are the same, but the responsibilities have shifted significantly from a few years ago. Instead of memorizing 15 or 20 steps in a calculation process, fund accountants at the bank now must be able to identify anomalies, help resolve software glitches and figure out which other teams they should work with. In some cases, they must also call clients directly, Ms. Horgan said, putting a new premium on people skills.

Managers began to ask, "What's the new entry-level job?" Ms. Horgan recalled.

So the bank's HR team, with input from front-line managers, is supplementing traditional job descriptions with more detailed "role charters" for entry-level jobs, emphasizing more abstract and sophisticated skills such as collaboration and problem-solving rather than basic functions such as report preparation.

"Tasks are changing more rapidly than they ever have in the past," Ms. Horgan said. As a result, "the career path [for young people] is changing as we speak."

The Wall Street Journal

The government doesn't break out data for entry-level jobs—the category is tough to track since it varies across industries and employers and changes as new skills and jobs appear. But economic studies show that employers, spoiled for candidates over the past few years, have been raising experience requirements for what might be considered entry-level work.

The number of recruiters requesting two or more years of work experience for some middle-skill occupations rose as much as 30% from 2007 to 2010, according to a paper by economists at Harvard University and the Federal Reserve Bank of Boston.

The slack labor market during that time offered a natural experiment, said one of the authors,
Alicia Sasser Modestino,
formerly at the Boston Fed and recently named a professor at Northeastern University. "Employers had carte blanche" to choose the most skilled applicants from a pool stocked with candidates, she said. Newly minted graduates with associate's or bachelor's degrees were forced to get experience elsewhere, such as in internships, or stretch their skills to find more demanding jobs.

The next few years will reveal whether a more worker-friendly job market forces companies to reduce those requirements, Ms. Sasser Modestino said.

As some entry-level positions are transformed or fall away, others emerge. The job of social-media manager, a possible entree into the fields of media or marketing, didn't exist five years ago. Now, more than 18,000 such positions are open, according to job board Indeed, and thousands more workers serve in the role. And the number of entry-level jobs in computer systems and public relations are expected to grow over the next decade.

Still, a sampling of Bureau of Labor Statistics data suggests that demand for bottom-rung professional positions, such as loan officers, insurance underwriters and credit analysts, lagged behind that of the overall job market from 2003 to 2013 and is expected to remain stunted, or even shrink, in the coming decade.

As a result, people once expected to input data and run basic calculations—workers with titles such as credit analyst at banks or in lower-level accounting roles—are now being asked to manipulate and analyze the data. "Everyone gets pushed up the food chain," Mr. Hamilton said.

Entry-level workers are now being assigned thinking roles, as opposed to "just following a checklist," said
David Vogel,
who manages the undergraduate career-development office at the University of North Carolina's Kenan-Flagler Business School. "It raises the bar on the types of work that can be done by the entry-level hire, as opposed to eliminating the need."

At the same time, workforce experts see a parallel dynamic where employers are reducing training budgets. The result is that companies want workers to arrive job-ready, with both soft and hard skills.

For example, training programs for sales jobs at major corporations regularly lasted two years in the 2000s, teaching the ins and outs of the products they were selling and explaining market trends for distributors and end users. Now, new hires would be lucky to get six months of ramp-up time, said
Andrea Dixon,
executive director of Baylor University's Center for Professional Selling, which prepares students for sales careers at companies such as
Humana Inc.,Oracle Corp.
and
3M Co.

Ms. Dixon tells of a former student who, within 18 months of joining a Fortune 100 chemical company, was running accounts valued at $35 million. A decade ago, she said, a territory that big would be handled by a 40-something, not a 23-year-old.

At Deloitte Consulting LLP, new hires still receive intensive training, but they are expected to arrive with the communication skills and business acumen to sit in client meetings from the start. A decade ago, managers took the approach that "we can teach you everything you need to know," said
Jim Hagy,
a director in the human-capital practice. Today, "what we need is people who can immediately get in front of clients. They're not going to sit in a back office anymore."

Such high expectations for low-level workers mean early experience is crucial.

Marissa Onsager,
who graduated in May from Kenan-Flagler, spent last summer interning in the sales department at
General Mills Inc.
Her experience there culminated in delivering a full presentation to a representative from a large supermarket chain that was seeking more insight on minority shoppers' purchasing patterns.

"It felt a little weird because I was so much younger than the customer," said Ms. Onsager, now 22. "But at the same time, I was the expert."

Ms. Onsager this month will start as a business analyst in Deloitte's Charlotte, N.C., office.